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How to navigate your way to a lower Swiss tax bill

Think Swiss watches are complex? You should see their tax system! With four-tiers of tax burden – federal, cantonal, municipal and church taxes – working out how much you'll have to pay can be a rather bewildering and time-consuming process.

How to navigate your way to a lower Swiss tax bill
Photo: Getty Images

Then there are those bizarre quirks you only come across in Switzerland – where else are you only allowed to lodge one tax return per household? For international residents, it can all seem like too much.

That said, there are some fairly simple ways to ensure that you pay lower taxes in Switzerland. Where you live is, of course, crucial – but so are a few other less obvious factors. In partnership with Tax Jungle, a new site for calculating Swiss taxes based on your exact personal circumstances, here are five things to consider to keep your tax bill low. 

1. Location, location, location

Much of your Swiss tax burden is divided between, cantonal taxes – that is to say, a tax that goes directly to your canton of residence – and municipal taxes. Cantonal taxes may cover infrastructure, education and healthcare, while municipal (or communal) taxes may be more focused on local social services. It’s good to know where this money is going, as you’re likely to be paying a fair amount! 

The tax rates for these two vary wildly across the country. Using the Tax Jungle tool, for instance, you can see that it’s not just a question of picking the right canton to take advantage of lower taxes, but the right town or village. Whether you want to spend to treat yourself or save to build for the future, the money you'll have left after your tax bill could vary greatly depending on just a relatively small distance!

Before moving to Switzerland or embarking on a cross-country move, carefully examine the area you’re looking at – can you save money depending on where you’re willing to live?

Want to keep your tax bill low? Use the Tax Jungle tool to find out how 

2. A question of belief 

It may seem rather personal to be asked whether you're a member of the three main churches in Switzerland – the Roman Catholic, Old Catholic and Lutheran churches. However, the way you answer the question is important. Like the other German-speaking countries, church taxes are levied to support the functioning of these organisations and roughly three quarters of the Swiss population choose to pay these taxes – up to around 300 Swiss francs a year. 

Photo: Getty Images

If you’re not a believer, simply mark ‘none’ on your paperwork as you register. If you've already ticked a box to say you are religious, you can always amend it with the authorities – but it may take some time. If you’re smart (and lucky), you could also choose a canton that doesn’t levy direct church taxes, such as Valais, Vaud and Ticino. Just be sure not to praise the Lord when you see how much money you’re saving …

3. Be a canny commuter

Switzerland isn’t a huge country, even by European standards. Some cantons can be crossed by foot in less than half an hour. It’s also a country serviced by excellent public transport. This gives the canny commuter a range of options when considering where to live – it doesn't have to be next door to your office.

Using a tool such as Tax Jungle allows you to compare a range of municipalities to find the one with the lowest overall tax rates. Adding an extra 15 minutes to your commute from commune to commune could save you hundreds of francs per year in taxes, while also giving you access to a broader range of social services – some communes offer a lot more than others. 

Moving for work? Use Tax Jungle to find out where you could save the most in tax  

4. Family matters

While we’d never advocate having a family simply for tax purposes (they tend to cost quite a bit of money, after all), those married or with a family will find that they pay lower taxes when it comes to those taken at the federal, cantonal and municipal level. 

This echoes the trend across many European countries to lower taxes for married couples. This is an important consideration for expats when deciding whether it’s affordable to bring your spouse and children with you if you're starting a new job. Switzerland has its share of cross-border commuters. But if you have a family, bear in mind that Switzerland does offer you some favourable tax treatment.

Combined with the tax savings that picking the right village can provide, this can make a huge difference to those coming to work in Switzerland and the standard of living they enjoy. 

5. Use the right tax comparison tool 

Whatever your circumstances, the new Tax Jungle website aims to be the simplest and most comprehensive tool to enable people living in or thinking of moving to Switzerland to calculate their potential taxes.

While other tools, such as that created by the Swiss federal government, give an overview, Tax Jungle users can enter their exact salary, marital status and other details to specifically locate the areas with the lowest tax rates for their own needs. It's available in English, as well as the four official languages of Switzerland (German, French, Italian and Romansh).

With just a few simple personal details, you can quickly find the kind of granular detail that you’d usually have to pay for – helping you make the best choice for your unique circumstances.

Moving to Switzerland or thinking of moving within its borders? Head over to Tax Jungle today to get a detailed comparison of the tax you'll pay depending on your personal circumstances and where you choose to live.

 

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OFFBEAT

Is Switzerland’s male-only mandatory military service ‘discriminatory’?

Under Swiss law, all men must serve at least one year in compulsory national service. But is this discriminatory?

Swiss military members walk across a road carrying guns
A new lawsuit seeks to challenge Switzerland's male-only military service requirement. Is this discriminatory? FABRICE COFFRINI / AFP

All men aged between the ages of 18 and 30 are required to complete compulsory military service in Switzerland. 

A lawsuit which worked its way through the Swiss courts has now ended up in the European Court of Human Rights, where the judges will decide if Switzerland’s male-only conscription requirement violates anti-discrimination rules. 

Switzerland’s NZZ newspaper wrote on Monday the case has “explosive potential” and has “what it takes to cause a tremor” to a policy which was first laid out in Switzerland’s 1848 and 1874 Federal Constitutions. 

What is Switzerland’s compulsory military service? 

Article 59 of the Federal Constitution of Switzerland says “Every man with Swiss citizenship is liable for military service. Alternative civilian service shall be provided for by law.”

Recruits must generally do 18 weeks of boot camp (longer in some cases). 

They are then required to spend several weeks in the army every year until they have completed a minimum 245 days of service.

Military service is compulsory for Swiss men aged 18 and over. Women can chose to do military service but this is rare.

What about national rather than military service? 

Introduced in 1996, this is an alternative to the army, originally intended for those who objected to military service on moral grounds. 

READ MORE: The Swiss army’s growing problem with civilian service

Service is longer there than in the army, from the age of 20 to 40. 

This must be for 340 days in total, longer than the military service requirement. 

What about foreigners and dual nationals? 

Once you become a Swiss citizen and are between the ages of 18 and 30, you can expect to be conscripted. 

READ MORE: Do naturalised Swiss citizens have to do military service?

In general, having another citizenship in addition to the Swiss one is not going to exempt you from military service in Switzerland.

However, there is one exception: the obligation to serve will be waved, provided you can show that you have fulfilled your military duties in your other home country.

If you are a Swiss (naturalised or not) who lives abroad, you are not required to serve in the military in Switzerland, though you can voluntarily enlist. 

How do Swiss people feel about military and national service? 

Generally, the obligation is viewed relatively positively, both by the general public and by those who take part in compulsory service. 

While several other European countries have gotten rid of mandatory service, a 2013 referendum which attempted to abolish conscription was rejected by 73 percent of Swiss voters. 

What is the court case and what does it say? 

Martin D. Küng, the lawyer from the Swiss canton of Bern who has driven the case through the courts, has a personal interest in its success. 

He was found unfit for service but is still required to pay an annual bill to the Swiss government, which was 1662CHF for the last year he was required to pay it. 

While the 36-year-old no longer has to pay the amount – the obligation only lasts between the ages of 18 and 30 – Küng is bring the case on principle. 

So far, Küng has had little success in the Swiss courts, with his appeal rejected by the cantonal administrative court and later by the Swiss Federal Supreme Court. 

Previous Supreme Court cases, when hearing objections to men-only military service, said that women are less suitable for conscription due to “physiological and biological differences”.

In Küng’s case, the judges avoided this justification, saying instead that the matter was a constitutional issue. 

‘No objective reason why only men have to do military service’

He has now appealed the decision to the European level. 

While men have previously tried and failed when taking their case to the Supreme Court, no Swiss man has ever brought the matter to the European Court of Human Rights. 

Küng told the NZZ that he considered the rule to be unjust and said the Supreme Court’s decision is based on political considerations. 

“I would have expected the Federal Supreme Court to have the courage to clearly state the obvious in my case and not to decide on political grounds,” Küng said. 

“There is no objective reason why only men have to do military service or pay replacement taxes. On average, women may not be as physically productive as men, but that is not a criterion for excluding them from compulsory military service. 

There are quite a few men who cannot keep up with women in terms of stamina. Gender is simply the wrong demarcation criterion for deciding on compulsory service. If so, then one would have to focus on physical performance.”

Is it likely to pass? 

Küng is optimistic that the Strasbourg court will find in his favour, pointing to a successful appeal by a German man who complained about a fire brigade tax, which was only imposed on men. 

“This question has not yet been conclusively answered by the court” Küng said. 

The impact of a decision in his favour could be considerable, with European law technically taking precedence over Swiss law.

It would set Switzerland on a collision course with the bloc, particularly given the popularity of the conscription provision. 

Küng clarified that political outcomes and repercussions don’t concern him. 

“My only concern is for a court to determine that the current regulation is legally wrong.”

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